By Jim Tompkins, CEO, Tompkins Associates
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Hi, my name is Jim Tompkins, President and CEO of Tompkins Associates and Tompkins International.
I am pleased to be with you today as we present our third installment of the sustainability podcast series on transportation and supply chain issues.
Our previous podcasts in this series have been on a general overview of sustainability, and we had special guest Ralph Cox review Packaging Sustainability in our last installment.
Today I am pleased to have with me Chris Ferrell, a Principal at Tompkins Associates.
Chris recently completed a survey through the Supply Chain Consortium on supply chain sustainability, which focused on transportation and supply chain issues.
Chris, glad to have you with us and looking forward to having you go through some of the survey results with us.
Jim:
Chris, based on the survey, what Green Business tools are companies using most frequently?
Chris:
Jim, I'd say the two most common tools are ones that would not have even been considered “green” just a few years ago: ROI or cost-payback analysis and also life-cycle assessment.
These financial tools have been staples of the capital expenditure process forever, but what companies are realizing is that the traditional formulas are too conservative, because the analysis gets done in a vacuum.
The most common business tools of the sustainability movement are really the same old tools applied with a more holistic perspective.
Jim:
So green business tools are really just financial tools in a new light?
Chris:
Not all of them; just the most common.
About one-third of survey respondents identified the deployment of environmental mapping systems. The same goes for environmental certification and reporting programs. Those are newer tools, and it’s reasonable to believe that they’ll continue to gain in popularity over the coming months and years. But they are more specialized, take time to achieve acceptance, and require personnel with some pretty specific expertise in order to successfully implement.
They’re coming, but they will take some time.
Jim:
But everybody’s got a finance guy who can do an ROI, right?
Chris:
Exactly right, Jim!
Jim:
What are some of the additional factors, Chris, that need to be considered?
Chris:
Well, carbon footprint is the one that's most commonly referenced. Over 70% of the survey’s respondents have programs in place to reduce that carbon footprint. To a degree, the U.S. is really just playing catch-up with our counterparts in Europe, but Wal-mart really deserves a lot of the credit here. They didn’t invent any of this stuff, but they took it mainstream. I can’t imagine even two years ago that number being higher than 20% for a North American-centric survey. Now? Companies are putting their best and brightest on the task of reducing fuel consumption and lowering carbon emissions.
Jim:
What technologies and strategies are there to reduce fuel consumption and emissions?
Chris:
Quite a lot, actually, but they’re not necessarily new, and they may not be where you expect them to be. When we’re discussing environmental initiatives, transportation is arguably the single most developed component of the supply chain.
Long before Wal-mart put sustainability at the center of the conversation and before Esty wrote Green to Gold, business people intuitively understood that things like shipping fewer, fuller trucks and converting air freight to ocean freight and increasing the MPG of their fleet was a good thing. The fact that all of these initiatives reduce CO2 emissions is, of course, co-incidental to the primary goal of reducing costs, but there’s something close to a perfect correlation between the two objectives.
Jim:
So, again, the new tools are the old tools.
Chris:
The new tools are there too. There’s some really cool and innovative stuff being done with polymers and metals to remove excess weight from trailers, the technology advancements in Cruise Control and APUs...
Jim:
...Alternative Power Units?
Chris:
Yes, Alternative Power Units, has increased to a point where drivers don’t mind using them like they once did. Some of the other ways to reduce carbon emissions range from the creative – things like fuel efficiency incentives for drivers, labor standards that highlight excessive idling – to the cutting edge; innovations like improved aerodynamics, low-viscosity synthetic lubricants, advanced power-train technologies, and automatic tire inflation systems.
But those are by-and-large components of the trucking industry. As a retailer or manufacturer I am limited to partnering with carriers who embrace these initiatives – like those actively participating in the EPA’s SmartWay program – and implementing them into my private fleet... if I even have one. Only about one-fourth of the survey respondents said they were implementing those initiatives.
Compare that with 96% who are coordinating their shipping to ensure the loads are full whenever possible.
Jim:
Earlier you said that the technologies and strategies to reduce fuel consumption may not be where you expect them to be. What did you mean by that?
Chris:
It really comes down to one of the fundamental truths about transportation sustainability: Even though it’s the link that consumes all the fossil fuels, it really is the tale that gets wagged by the dog.
If I’m a soccer mom shocked by the size of my gas bill, pumping gas into my over-sized, luxury SUV that gets terrible gas mileage, I can make a commitment to use less fuel – make fewer trips to the market, plan my trips out so that I’m not doing a lot of driving back and forth, start-up a carpool with other soccer moms – but the reality is that the vast majority of the damage was done when I purchased the over-sized, luxury SUV with the terrible gas mileage.
With business supply chains, every step someone takes back up-stream exponentially increases the opportunity for environmental and financial savings. Improving a facility’s shipping and receiving scheduling will reduce more idling than a driver could ever hope to achieve.
A robust OMS and TMS running un-constrained with multi-modal options will decrease fuel consumption better than a well-run dock. Eliminating excess space and weight in packaging so a company can increase the capacity of each truck does more for the environment than the OMS and TMS.
Getting the forecast right so that suppliers are only shipping what is needed – and doing so via ocean instead of air, or intermodal instead of truck, etc... does the most good of all.
Jim:
So is that the bottom line?
Chris:
I believe so. There is tremendous progress being made in the field of transportation sustainability, but those opportunities pale in comparison to the benefits that stand to be gained through advancements in scheduling and packaging design.
Jim:
Chris, thanks for your insight.
Chris:
Thank you for having me.
Jim:
Our next installment will be on facility and building sustainability. Until then, wishing you a very happy holiday season and terrific New Year; look forward to speaking with you all real soon.
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